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Tipping Culture in South Korea?...Consumers are upset when taxi tipping culture is introduced

Expect a virtuous cycle of improved customer experience and satisfaction

Concerns about spreading tipping culture and passing on costs to customers

Questions about excluded items such as fees

Kakao Mobility, which operates Kakao T, has introduced a pilot service for "thank you tips," which has sparked controversy. There are concerns about the spread of tipping culture and complaints that service improvements are passed on to customers. The lack of a clear explanation of what is excluded when tipping drivers is also adding to consumers' dissatisfaction.

According to Kakao Mobility on the 25th, Kakao T's 'Appreciation Tip' pilot service is a service that allows users to pay a tip if they give a five-star rating after using a taxi service. Users can choose to pay a tip of 1,000 won, 1,500 won, or 2,000 won. The service is applicable to black, model, venti, blue, and pet taxis. The duration of the service is undecided. This means that the service could become permanent.

A representative from Kakao Mobility said, "We hope to create a virtuous cycle by providing incentives for drivers to provide better taxi services and improve customer experience and satisfaction." However, users complain about why they have to pay for it. In reviews of the KakaoT application (app), users have posted reactions such as, "If you care about the driver, reduce Kakao Mobility's fee," and "It seems like the headquarters is shifting the burden to the users when it could have reasonably covered the fee."

Users are also questioning whose wallet their appreciation tips go into. This is because Kakao Mobility's disclaimer says, "The full amount of the gratitude tip, excluding card fees, will be delivered to the driver immediately after payment. It does not specify what is excluded other than card fees, so there is a concern that Kakao may be taking a cut.
▲카카오모빌리티가 19일부터 카카오T에 '감사 팁' 기능을 추가했다. (카카오 T 공지사항 갈무리)

Kakao Mobility clarified that the company does not take any fees. "In addition to the card fee, a phone banking fee is provided to the third party," said a representative from Kakao Mobility, explaining that "the phone banking fee is the cost of transferring the points to the driver when the user pays a thank-you tip and then cashing it out." Combined, the card payment fee and phone banking fee take away 3.5% of the tip.

There are also concerns that KakaoT will create a tipping culture in Korea. Of course, iMtaxi and Tada already have tipping services in place. However, they are only applying it on a small scale to large taxis. The impact is bound to be different from KakaoT, which has become the national taxi app by creating an app-based taxi hailing market. This is why users criticize gratitude tipping in the U.S., where it has been criticized as a cause of "tipflation" (tip + inflation).

Kakao Mobility's stance is that it is not a burden because customers can autonomously decide whether to tip or not by rating the ride after getting off. However, it has been pointed out that gratitude tips can lead to consumer burdens. Eun-hee Lee, a professor of consumer studies at Inha University, said, "Tipping has the effect of raising the price, and from the consumer's point of view, if you don't tip, you may feel sorry for yourself, and it may be difficult to ask for service." "Korea traditionally does not have a tipping culture, and it is basically reflected in the price, so it would be better not to have an additional tipping system," she said.


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